Bill Text: TX HB79 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to exemptions from the sales and use tax and the franchise tax for certain businesses during an initial period of operation in the state.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-02-09 - Referred to Ways & Means [HB79 Detail]
Download: Texas-2015-HB79-Introduced.html
84R271 TJB-D | ||
By: Guillen | H.B. No. 79 |
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relating to exemptions from the sales and use tax and the franchise | ||
tax for certain businesses during an initial period of operation in | ||
the state. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. This Act may be cited as the Texas Open for | ||
Business Act. | ||
SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended | ||
by adding Section 151.3183 to read as follows: | ||
Sec. 151.3183. TAXABLE ITEMS USED BY CERTAIN NEW BUSINESSES | ||
DURING INITIAL PERIOD OF OPERATION. (a) In this section: | ||
(1) "Internal Revenue Code" means the Internal Revenue | ||
Code of 1986 in effect on December 31, 2014, excluding any changes | ||
made by federal law after that date, but including any regulations | ||
adopted under that code applicable to the tax year to which the | ||
provisions of the code in effect on that date applied. | ||
(2) "Qualifying job" means an employment position that | ||
is: | ||
(A) new to and located in the state; | ||
(B) permanent and full-time; and | ||
(C) held by an employee for at least 10 months | ||
during each 12-month period. | ||
(b) The sale to or storage, use, or other consumption by a | ||
new business of a taxable item that will be directly used or | ||
consumed by the business is exempted from the taxes imposed by this | ||
chapter. | ||
(c) A person is a new business for purposes of this section | ||
if the person is a business that: | ||
(1) is primarily located in a county with a population | ||
of 250,000 or less; | ||
(2) is first located and begins doing business in this | ||
state on or after January 1, 2016, regardless of whether the | ||
business is chartered or organized in this state or outside this | ||
state; | ||
(3) is not substantially similar in operation and in | ||
ownership to another business located in this state during any part | ||
of the preceding five years; | ||
(4) is primarily engaged in: | ||
(A) a manufacturing activity described in | ||
categories 2011-3999 of the 1987 Standard Industrial | ||
Classification Manual published by the United States Department of | ||
Labor; or | ||
(B) qualified research, as defined by Section 41, | ||
Internal Revenue Code; and | ||
(5) creates, on or after January 1, 2016, and not later | ||
than the 30th day after the date the business first locates in this | ||
state, at least one qualifying job. | ||
(d) To claim an exemption under this section, a registration | ||
number issued by the comptroller must be stated on the exemption | ||
certificate provided by the purchaser of the item. | ||
(e) Subject to Subsection (f), a person may apply to the | ||
comptroller for issuance of a registration number by the | ||
comptroller. The application must be made on a form prescribed by | ||
the comptroller and include the information required by the | ||
comptroller to establish that the person is a new business as | ||
described by Subsection (c). | ||
(f) A person who meets the requirements of a new business as | ||
described by Subsection (c) must apply for a registration number | ||
not later than the first anniversary of the date the person begins | ||
doing business in this state. The comptroller shall deny an | ||
application received after that date. | ||
(g) A registration number issued under this section expires | ||
on the 10th anniversary of the date of issuance, unless revoked at | ||
an earlier time by the comptroller as provided by Subsection (h). | ||
The registration number may not be renewed. | ||
(h) The comptroller shall revoke and may not reinstate a | ||
registration number issued to a person if the person ceases to meet | ||
a requirement prescribed by Subsection (c). A person whose | ||
registration number is revoked is liable for payment of the taxes | ||
imposed under this chapter on the sales price of each taxable item | ||
for which the person claimed an exemption under this section on or | ||
after the date the registration number was revoked. | ||
(i) The comptroller shall adopt rules necessary to | ||
implement this section, including rules relating to the: | ||
(1) qualification of a person for an exemption under | ||
this section; | ||
(2) issuance and revocation of a registration number | ||
issued under this section; and | ||
(3) reporting and other procedures necessary to ensure | ||
that a person to whom a registration number is issued under this | ||
section complies with this section and remains entitled to the | ||
exemption authorized by this section. | ||
SECTION 3. Section 171.0001(4), Tax Code, is amended to | ||
read as follows: | ||
(4) "Beginning date" means: | ||
(A) except as provided by Paragraph (B): | ||
(i) for a taxable entity chartered or | ||
organized in this state, the date on which the taxable entity's | ||
charter or organization takes effect; and | ||
(ii) [ |
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the date on which the taxable entity begins doing business in this | ||
state; or | ||
(B) for a taxable entity that meets the | ||
requirements of a new business under Section 151.3183, the earlier | ||
of: | ||
(i) the 10th anniversary of the date on | ||
which the taxable entity begins doing business in this state; or | ||
(ii) the date the taxable entity ceases to | ||
comply with the requirements of a new business under Section | ||
151.3183. | ||
SECTION 4. Section 171.001, Tax Code, is amended by adding | ||
Subsection (d) to read as follows: | ||
(d) Notwithstanding Subsection (a), the tax imposed under | ||
this chapter is not imposed on a taxable entity that meets the | ||
requirements of a new business under Section 151.3183 until the | ||
earlier of: | ||
(1) the 10th anniversary of the date on which the | ||
taxable entity begins doing business in this state; or | ||
(2) the date the taxable entity ceases to comply with | ||
the requirements of a new business under Section 151.3183. | ||
SECTION 5. Section 171.063(g), Tax Code, is amended to read | ||
as follows: | ||
(g) If a corporation's federal tax exemption is withdrawn by | ||
the Internal Revenue Service for failure of the corporation to | ||
qualify or maintain its qualification for the exemption, the | ||
corporation's exemption under this section ends on the effective | ||
date of that withdrawal by the Internal Revenue Service. The | ||
effective date of the withdrawal is considered the corporation's | ||
beginning date for purposes of determining the corporation's | ||
privilege periods and for all other purposes of this chapter, | ||
except that if the corporation would have been subject to Section | ||
171.001(d) in the absence of the federal tax exemption, and the | ||
effective date of the withdrawal is a date earlier than the date the | ||
corporation would have become subject to the franchise tax as | ||
provided by Section 171.001(d), the date the corporation would have | ||
become subject to the franchise tax under that section is | ||
considered the corporation's beginning date for those purposes. | ||
SECTION 6. Section 171.204, Tax Code, is amended by adding | ||
Subsection (d) to read as follows: | ||
(d) The comptroller may require a taxable entity on which | ||
the tax imposed under this chapter is not imposed solely because of | ||
the application of Section 171.001(d) to file an information report | ||
stating the taxable entity's beginning date as determined under | ||
Section 171.0001(4)(B). The comptroller may require the report to | ||
include other information the comptroller determines necessary, | ||
except that the comptroller may not require the taxable entity to | ||
report or compute its margin. | ||
SECTION 7. Not later than December 1, 2015, the comptroller | ||
of public accounts shall adopt rules as provided by Section | ||
151.3183(i), Tax Code, as added by this Act. | ||
SECTION 8. This Act takes effect September 1, 2015. |